KCS Reports Record Second Quarter Revenues for the 3 Months Ending June 30, 2008;...

KCS Reports Record Second Quarter Revenues for the 3 Months Ending June 30, 2008; Operating Ratio of 78.5%, EPS of $0.56

Second Quarter Highlights

-- Revenues of $486.2 million, a 13.8% increase over 2007 with
all business units experiencing increases.

-- Operating income of $104.6 million compared with $83.1 million
in 2007, a 25.9% increase.

-- Operating ratio of 78.5%, a 2.0-point improvement over the
prior year period.

-- Diluted EPS of $0.56 compared with $0.30 in 2007, an 86.7%
increase.
KANSAS CITY, Mo.--(Business Wire)--
Kansas City Southern (KCS) (NYSE:KSU) reported record second
quarter revenues of $486.2 million, a 13.8% increase over second
quarter 2007. The revenue growth was attributable to a continued
strong pricing environment, significant growth in certain business
units and an increase in fuel surcharges.

For the second quarter, KCS revenue growth was led by the chemical
and petroleum sector which had revenue growth of 19.9% driven by new
business primarily in plastic products. Carloads in this sector were
13.2% higher than in the prior year period. Agriculture and minerals
experienced revenue increases of 18.4% quarter-over-quarter. In
addition, in the second quarter, revenues in industrial and consumer
products, which includes forest products, metals and scrap and other
commodities, increased 12.4%. Intermodal revenue grew 20.3%,
automotive revenues increased 10.3% and coal revenue improved 5.7%.

Second quarter operating expenses were $381.6 million, an increase
of 10.9% over the prior year period, primarily driven by a 38.8%
increase in fuel expense. Excluding the impact of fuel expense,
operating expenses were up 4.3%.

Operating income for the second quarter of 2008 was $104.6 million
compared with $83.1 million last year, a 25.9% improvement. The second
quarter 2008 operating ratio was 78.5%, a 2.0-point improvement
compared with second quarter 2007.

Net income available to common shareholders in the second quarter
totaled $50.5 million, or $0.56 per diluted share, compared with $25.3
million, and $0.30 per diluted share, respectively, in second quarter
2007.

Comments from the Chairman

"All the positive revenue and operational trends that highlighted
KCS' first quarter performance were even more pronounced over the
prior three months resulting in a strong second quarter," stated
Chairman and Chief Executive Officer Michael R. Haverty. "Record
revenues, a 26% increase in operating income, and productivity
measured by increased velocity, higher locomotive availability and
lower terminal dwell times contributed to strong performance and were
important factors resulting in a two-point improvement in the
operating ratio to 78.5%.

"Also notable is that KCS recorded volume growth despite a U.S.
economy that has provided a downward pressure on traffic related to
building materials, appliances and automobiles. Volume pressure in
those areas was more than compensated for by double digit volume gains
in chemicals, metals and scrap, and a 44% increase in container
volumes out of Lazaro Cardenas.

"KCS' diversified revenue portfolio and unique cross-border
network characterized by a well-balanced mix of established customers
and new business opportunities are central to the Company's belief
that we will be the fastest growing railroad in North America over the
foreseeable future."

Headquartered in Kansas City, Missouri, Kansas City Southern is a
transportation holding company that has railroad investments in the
U.S., Mexico and Panama. Its primary U.S. holding is The Kansas City
Southern Railway Company, serving the central and south central U.S.
Its international holdings include Kansas City Southern de Mexico,
S.A. de C.V., serving northeastern and central Mexico and the port
cities of Lazaro Cardenas, Tampico and Veracruz, and a 50 percent
interest in Panama Canal Railway Company, providing ocean-to-ocean
freight and passenger service along the Panama Canal. Kansas City
Southern's North American rail holdings and strategic alliances are
primary components of a NAFTA Railway system, linking the commercial
and industrial centers of the U.S., Mexico and Canada.

This press release includes statements concerning potential future
events involving the Company, which could materially differ from the
events that actually occur. The differences could be caused by a
number of factors including those factors identified in the "Risk
Factors" and the "Cautionary Information" sections of the Company's
Form 10-K for the year ended December 31, 2007, filed by the Company
with the Securities and Exchange Commission (SEC) (Commission file no.
1-4717). The Company will not update any forward-looking statements in
this press release to reflect future events or developments.

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Kansas City Southern
Income Statement
(In millions, except share and per share amounts)
(Unaudited)

Three Months Six Months
Ended June 30, Ended June 30,
----------------- -----------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenues $ 486.2 $ 427.1 $ 936.8 $ 838.4

Operating expenses:
Compensation and benefits 98.3 98.5 204.4 198.4
Purchased services 49.7 43.1 94.6 89.8
Fuel 91.2 65.7 169.1 128.2
Equipment costs 47.9 48.5 93.7 93.4
Depreciation and amortization 40.8 40.8 81.5 78.9
Casualties and insurance 19.2 17.5 38.2 36.9
Materials and other costs 34.5 29.9 67.3 57.3
-------- -------- -------- --------

Total operating expenses 381.6 344.0 748.8 682.9
-------- -------- -------- --------

Operating income 104.6 83.1 188.0 155.5

Equity in net earnings of
unconsolidated affiliates 4.7 2.8 8.8 3.9
Interest expense (27.7) (41.6) (67.2) (81.0)
Debt retirement costs (5.6) (6.9) (5.6) (6.9)
Foreign exchange gain 5.7 3.4 8.2 0.3
Other income 0.2 3.3 3.2 3.9
-------- -------- -------- --------

Income before income taxes and
minority interest 81.9 44.1 135.4 75.7
Income tax expense 26.4 13.8 42.1 23.1
-------- -------- -------- --------

Income before minority interest 55.5 30.3 93.3 52.6
Minority interest 0.1 0.1 0.2 0.2
-------- -------- -------- --------

Net income 55.4 30.2 93.1 52.4
Preferred stock dividends 4.9 4.9 9.7 10.1
-------- -------- -------- --------

Net income available to common
shareholders $ 50.5 $ 25.3 $ 83.4 $ 42.3
======== ======== ======== ========

Earnings per share:
Basic earnings per share $ 0.64 $ 0.33 $ 1.07 $ 0.56
======== ======== ======== ========

Diluted earnings per share $ 0.56 $ 0.30 $ 0.94 $ 0.52
======== ======== ======== ========

Average shares outstanding (in thousands):
Basic 79,272 75,892 77,896 75,737
Potential dilutive common shares 19,874 14,840 20,804 14,813
-------- -------- -------- --------
Diluted 99,146 90,732 98,700 90,550
======== ======== ======== ========
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Kansas City Southern
Revenue & Carloadings By Commodity - Second Quarter 2008
(Dollars in Millions)

Carloadings Revenue

Second Quarter % Second Quarter %
--------------------------- --------------
2008 2007 Change 2008 2007 Change
------------------- ------- ------- ------- ------ -------

Coal
56,015 64,721 (13.5%) Unit Coal $ 38.2 $ 36.9 3.5%
12,687 12,884 (1.5%) Other Coal 9.9 8.6 15.1%
------------------- ------- ------- ------
68,702 77,605 (11.5%) Total 48.1 45.5 5.7%
------------------- ------- ------- ------

Industrial
& Consumer
Products
Forest
41,165 47,297 (13.0%) Products 60.0 61.1 (1.8%)
31,029 24,008 29.2% Metal/Scrap 47.3 31.2 51.6%
29,117 28,726 1.4% Other 32.7 32.3 1.2%
------------------- ------- ------- ------
101,311 100,031 1.3% Total 140.0 124.6 12.4%
------------------- ------- ------- ------

Chemical &
Petroleum
Products
Agri
5,058 3,561 42.0% Chemicals 6.8 4.2 61.9%
Other
26,707 26,959 (0.9%) Chemicals 39.7 36.1 10.0%
16,567 15,245 8.7% Petroleum 25.0 18.8 33.0%
16,231 11,264 44.1% Plastics 22.4 19.2 16.7%
------------------- ------- ------- ------
64,563 57,029 13.2% Total 93.9 78.3 19.9%
------------------- ------- ------- ------

Agriculture
& Minerals
40,093 42,596 (5.9%) Grain 68.7 57.2 20.1%
Food
14,918 15,733 (5.2%) Products 25.3 24.5 3.3%
Ores &
15,752 12,897 22.1% Minerals 16.6 11.2 48.2%
Stone, Clay
4,834 4,477 8.0% & Glass 7.1 6.5 9.2%
------------------- ------- ------- ------
75,597 75,703 (0.1%) Total 117.7 99.4 18.4%
------------------- ------- ------- ------

Intermodal
&
Automotive
127,512 121,160 5.2% Intermodal 40.3 33.5 20.3%
27,666 28,615 (3.3%) Automotive 32.1 29.1 10.3%
------------------- ------- ------- ------
155,178 149,775 3.6% Total 72.4 62.6 15.7%
------------------- ------- ------- ------

TOTAL FOR
BUSINESS
465,351 460,143 1.1% UNITS 472.1 410.4 15.0%
Other
Revenue 14.1 16.7 (15.6%)
------------------- ------- ------- ------

465,351 460,143 1.1% TOTAL $486.2 $427.1 13.8%
=================== ======= ======= ======
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Kansas City Southern
Revenue & Carloadings By Commodity - Year to Date June 30, 2008
(Dollars in Millions)

Carloadings Revenue

Year to Date % Year to Date %
-------------------------- -------------
2008 2007 Change 2008 2007 Change
------------- ---------- -------- ------ ------ ------

Coal
115,135 127,020 (9.4%) Unit Coal $ 75.2 $ 72.5 3.7%
26,338 25,728 2.4% Other Coal 19.9 18.1 9.9%
------------- ---------- ------ ------
141,473 152,748 (7.4%) Total 95.1 90.6 5.0%
------------- ---------- ------ ------

Industrial
& Consumer
Products
Forest
83,878 91,947 (8.8%) Products 119.7 118.0 1.4%
58,313 53,239 9.5% Metal/Scrap 87.0 67.9 28.1%
53,898 56,900 (5.3%) Other 57.2 60.9 (6.1%)
------------- ---------- ------ ------
196,089 202,086 (3.0%) Total 263.9 246.8 6.9%
------------- ---------- ------ ------

Chemical &
Petroleum
Products
Agri
9,079 6,991 29.9% Chemicals 12.2 8.4 45.2%
Other
52,980 49,730 6.5% Chemicals 76.6 65.9 16.2%
33,056 33,149 (0.3%) Petroleum 49.1 42.1 16.6%
31,093 21,743 43.0% Plastics 42.7 37.5 13.9%
------------- ---------- ------ ------
126,208 111,613 13.1% Total 180.6 153.9 17.3%
------------- ---------- ------ ------

Agriculture
& Minerals
80,472 81,752 (1.6%) Grain 135.0 109.2 23.6%
Food
29,464 31,764 (7.2%) Products 48.7 49.5 (1.6%)
Ores &
28,275 27,105 4.3% Minerals 29.3 23.0 27.4%
Stone, Clay
9,186 7,952 15.5% & Glass 13.5 11.5 17.4%
------------- ---------- ------ ------
147,397 148,573 (0.8%) Total 226.5 193.2 17.2%
------------- ---------- ------ ------

Intermodal
&
Automotive
251,579 250,465 0.4% Intermodal 76.1 66.3 14.8%
54,878 51,454 6.7% Automotive 60.4 52.8 14.4%
------------- ---------- ------ ------
306,457 301,919 1.5% Total 136.5 119.1 14.6%
------------- ---------- ------ ------

TOTAL FOR
BUSINESS
917,624 916,939 0.1% UNITS 902.6 803.6 12.3%
Other
Revenue 34.2 34.8 (1.7%)
------------- ---------- ------ ------

917,624 916,939 0.1% TOTAL $936.8 $838.4 11.7%
============= ========== ====== ======
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Kansas City Southern
William H. Galligan, 816-983-1551
bgalligan@kcsouthern.com

Copyright Business Wire 2008